DAC6 (Council Directive (EU) 2018/822), SAF-T (Standard Audit File for Tax), and CSR (Corporate Sustainability Reporting) are three distinct regulatory frameworks that serve different purposes but all contribute to greater transparency and accountability in business operations.
Here’s a detailed comparison of each:
DAC6
Acronym:
DAC6 stands for "Directive on Administrative Cooperation in the field of taxation (Directive 2018/822/EU)." It is the sixth version of the Directive on Administrative Cooperation (DAC) in the European Union
Purpose:
To mandate the disclosure of cross-border tax arrangements that could potentially be used for aggressive tax planning.
Enhance tax transparency and enable tax authorities to take preventive or corrective action against tax evasion and avoidance.
Scope:
Focuses on intermediaries (tax advisors, accountants, lawyers) or taxpayers who engage in cross-border arrangements.
Applies to arrangements that meet certain ‘hallmarks’ indicating potential tax avoidance.
Reporting Requirements:
Intermediaries or taxpayers must report certain cross-border arrangements to the tax authorities.
Reports must be filed within 30 days of the arrangement being made available for implementation.
Objective:
To provide tax authorities with early information about potentially aggressive tax planning strategies.
More details:
SAF-T
Acronym:
SAF-T stands for "Standard Audit File for Tax." It is an international standard for the electronic exchange of accounting data between businesses and national tax authorities, developed by the Organisation for Economic Co-operation and Development (OECD).
Purpose:
To facilitate the electronic exchange of accounting data between organisations and tax authorities.
Improve the efficiency and effectiveness of tax audits.
Scope:
Covers detailed financial and transactional data including general ledger entries, accounts payable and receivable, inventory, and fixed assets.
Reporting Requirements:
Companies must submit their accounting data in a standardised electronic format to tax authorities.
The frequency and specific requirements of SAF-T reporting can vary by country.
Objective:
To provide tax authorities with comprehensive and standardised accounting data for tax audits and verification.
More details:
CSR
Acronym:
CSR stands for "Corporate Sustainability Reporting." It is a type of reporting that involves disclosing information about a company's environmental, social, and governance (ESG) practices and impacts.
Purpose:
To disclose information on a company’s environmental, social, and governance (ESG) performance.
Enhance transparency about how companies impact and manage sustainability issues.
Scope:
Applies to large companies and publicly listed companies, with some variations depending on local regulations.
Covers a wide range of non-financial information, including environmental policies, social impact, diversity, human rights, and anti-corruption measures.
Reporting Requirements:
Companies must report on their ESG performance, often following frameworks like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), or the EU’s Non-Financial Reporting Directive (NFRD).
Objective:
To provide stakeholders, including investors, consumers, and regulators, with information about a company’s sustainability practices and impacts.
More details:
COMPARISON
Purpose and Focus:
DAC6: Tax transparency, focusing on potentially aggressive cross-border tax arrangements.
SAF-T: Financial transparency, focusing on detailed accounting data for tax audits.
CSR: Sustainability transparency, focusing on environmental, social, and governance impacts.
Scope:
DAC6: Cross-border tax arrangements.
SAF-T: Detailed financial and transactional data.
CSR: Non-financial information on ESG factors.
Regulatory Requirements:
DAC6: Reporting specific tax arrangements within a set timeframe.
SAF-T: Submission of standardised accounting data, frequency varying by jurisdiction.
CSR: Annual or periodic reporting on ESG performance, guided by various frameworks.
Objective:
DAC6: To enable tax authorities to detect and prevent tax avoidance.
SAF-T: To support tax authorities in conducting efficient and effective tax audits.
CSR: To inform stakeholders about a company’s sustainability practices and impacts.
Integration and Synergy
While each framework serves a different purpose, they collectively contribute to a holistic approach to transparency and accountability:
DAC6 ensures transparency in tax practices, helping to combat tax avoidance and evasion.
SAF-T provides detailed financial data to support these efforts with rigorous audits.
CSR offers insight into the broader impact of a company’s operations, aligning financial transparency with ethical and sustainable practices.
Together, they help create a comprehensive regulatory environment that promotes not only financial integrity but also sustainable and responsible business practices.
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